Business cycle impact on pollution levels in the city of Madrid using functional data

Abstract

El objetivo de este trabajo es analizar si la evolución de los niveles de emisión de NO2 y PM10 en Madrid áreas metropolitanas con mucho tráfico se ven afectadas por los ciclos económicos (compuestos por un auge, recesión y recuperación). Los resultados obtenidos a través del la estadística Tau funcional de Kendall ha revelado que las similitudes y diferencias encontradas entre los años de auge, la recesión y la recuperación demuestran el efecto de las fluctuaciones cíclicas de la economía sobre los niveles de contaminación. Esto se debe a que las correlaciones negativas y cercanas a cero obtenidas a través de estos períodos representan una señal de que los niveles de contaminación con respecto a estas dos partículas son significativamente diferente durante las fases de los ciclos económicos.

The aim of this paper is to analyse whether the evolution of NO2 and PM10 emission levels in the Madrid metropolitan area with heavy traffic are affected by business cycles (comprised of a boom, recession and recovery). Therefore, we explore if economic developments act as automatic environmental stabilizers in an urban context in order to provide guidelines for environmental policymaking in large cities. Considering the continuous nature of the particles that this paper analyses, functional data have been used and the most suitable statistical method has been applied to this information’s typology. The aim is to capture the behaviour of NO2 and PM10 particles throughout the booming years (2001-2005), the recession (2008-2012) and the recovery (2014-2018) periods. The results obtained through the Kendall’s functional Tau statistic have revealed that the similarities and differences found between the booming years, the recession and the recovery prove the effect of the economy’s cyclical fluctuations on pollution levels. This is due to the fact that the negative and close to zero correlations obtained through these periods represent a sign that pollution levels regarding these two particles are significantly different during the phases of business cycles.